1. The Field of the Invention
The invention is in the field of petroleum reservoir asset management, more particularly in the field of petroleum project valuation.
2. The Relevant Technology
Petroleum is a critical fuel source and is the life blood of modern society. There is tremendous economic opportunity in finding and extracting petroleum. Due to a variety of technical and geological obstacles, it is typically impossible to recover all of the petroleum contained in a reservoir. With advancing technologies and increasing economic incentive due to higher crude oil prices, the average petroleum reservoir recovery rate can now approach about 35%. While this represents a significant increase in average total petroleum recovery in recent years, it also means that about 65% of the petroleum found in a typical reservoir remains unrecoverable from an economic and/or technical standpoint.
Given the high cost of exploration, dwindling opportunities to find new petroleum reservoirs, and the rising cost of petroleum as a commodity, there currently exists a tremendous economic opportunity for organizations to significantly increase both short-term and long-term production across their petroleum reservoirs. When determining the value (and thus potential profitability) of a new petroleum project, operators typically consider barrels of P1 (proved developed producing) reserves to be created by the project. However, it can be difficult to determine the true value (and thus the potential profitability) of new petroleum projects. For example, with regard to investing in and determining the value of new petroleum projects, operators often fail to consider current production and other available reserves. These difficulties in turn make it difficult to determine when undertaking a new petroleum project is economically feasible. Further, as technology changes, production rates and proven resources can also change. However, without consideration of these and other types of changes, petroleum project valuations can be less accurate.
While the technology may, in fact, exist to increase current production and/or increase total long-term recovery of an organization's petroleum reservoirs, an impediment to implementing an intelligent long-term plan for maximizing current output, extending the life of each reservoir, and increasing total recovery across reservoirs is inadequate knowledge of where to focus the organization's limited resources for optimal production. For example, while a particular reservoir may underperform relative to other reservoirs, which might lead some to neglect further development of the reservoir, the reservoir may, in fact, contain much larger quantities of recoverable petroleum but be under-producing simply due to poor management. Furthermore, organizations may waste resources developing some reservoirs, in which the production gains achieved are disproportionately small compared to the developmental resources expended. The inability to properly diagnose on which reservoirs to focus further development and resources, and to implement an intelligent recovery plan can result in diminished short-term productivity and long-term recovery across the organization's petroleum reservoirs.
In general, those who operate production facilities typically focus on oil well maintenance at an individual reservoir level, and may even implement the latest technologies for maximizing well output at the reservoir. They fail, however, to understand the total picture of health and longevity of the reservoir, and how the reservoir performs relative to other reservoirs, both on a short-term and on a long-term basis. These difficulties can lead to inaccurate valuations of petroleum projects. For example, assessing a new project, such as, drilling a new well, without considering an operator's overall production and other available reserves can reduce the accuracy of economic indicators with respect to the new project.